Tennessee man peddles fake health plans

March 07, 2018, Brentwood, TN 
A Brentwood man pleaded guilty on Wednesday to overseeing a fraudulent health plan scheme that targeted people who were denied traditional health insurance due to preexisting conditions.

Timothy Thomas, 55, pleaded guilty to one count of mail fraud and one count of contempt before U.S. District Judge David Lawson.

Thomas is the former owner and CEO of Nashville-based United Benefits of America LLC., a telemarketing company that sold limited-benefit health plans to consumers who believed they were purchasing traditional health insurance.

Thomas also admitted to violating a federal court order that froze his assets and shut down the company in 2010, according to a release from the U.S. Department of Justice.

He was charged in a 15-count indictment filed in October 2014, and is scheduled to be sentenced by Lawson on June 25.

While operating the company from at least 2007 to 2010, Thomas hired sales associates to sell "association memberships" created by third-party companies over the phone to consumers.

The sales script he used attempted to conflate the memberships as having equal quality to traditional health insurance, without telling consumers that such health plans left them with "the vast majority of the financial risk," according to the release.

Employees used terms such as "deductibles" and "copays" to make customers believe they were buying traditional health insurance.

Despite being notified routinely by the Better Business Bureau of customers complaining they were deceived, Thomas admitted that he rarely fired sales employees for lying to customers, "but routinely fired salespeople for low sales numbers," the release says.

After a judge froze Thomas' assets in 2010 pending a lawsuit by the Federal Trade Commission, Thomas violated it by withdrawing more than $100,000 from a brokerage account and convincing a friend to deposit checks totaling $528,647 into the friend’s bank account, he admitted.

Thomas agreed to forfeit $1.5 million as part of his plea agreement, which represents the amount he personally gained through the scheme.